- The Australian dollar rose modestly on Thursday, recovering after hitting an 18-month low against the greenback on Wednesday.
- The Aussie’s movements largely reflected shifts in investor sentiment seen during the session.
- It’s a busy data calendar today with most of the big events arriving in the second half of the session. In Asia, the performance of Chinese financial markets will likely be influential.
The Australian dollar rose modestly on Thursday, recovering after hitting an 18-month low against the greenback on Wednesday.
Its performance mirrored shifts in investor sentiment seen during the session, pushing higher in North American trade as US stocks rebounded.
Here’s the scoreboard as at 7am in Sydney.
AUD/USD 0.7352 , 0.0012 , 0.16%
AUD/JPY 81.22 , 0.30 , 0.37%
AUD/CNH 4.8781 , 0.0214 , 0.44%
AUD/EUR 0.6354 , 0.0002 , 0.03%
AUD/GBP 0.5620 , 0.0023 , 0.41%
AUD/NZD 1.0877 , 0.0073 , 0.68%
AUD/CAD 0.9745 , -0.0042 , -0.43%
After falling heavily on Wednesday, the Aussie found buying support in Asia following a stronger-than-expected Chinese yuan fix from the People’s Bank of China (PBOC).
While the USD/CNY was set at 6.5960, the highest level since December 20 last year, the fix was lower than what many traders were anticipating, helping the Aussie to push higher against most major currencies in Asia.
After dipping briefly in European trade as stocks across the region were pummeled, the AUD/USD found its footing in the second half of the session, mirroring the movements in US stocks throughout.
Interestingly, the Aussie showed no real reaction to a further decline in offshore traded yuan, or CNH, with the USD/CNH continuing to push higher from the levels seen in Asia.
In recent days, the Aussie has been sensitive to movements in the yuan.
“USD/CNH has continued to lift, and currently shows little sign of reversing direction despite China’s National Development and Reform Commission releasing a statement indicating it will open up market access to various industries,” said Richard Grace, Chief Currency Strategist at the Commonwealth Bank.
“Among the details, China will remove the foreign ownership cap in Chinese banks, scrap limits on foreign ownership in brokers and insurance companies.”
Against the crosses, and reflecting the improvement in investor sentiment seen during the session, the Aussie managed to outperform against the safe-haven Japanese yen.
It also rallied against the New Zealand dollar following the release of a dovish monetary policy statement from the Reserve Bank of New Zealand (RBNZ) earlier in the day, leading to speculation that the next move in official interest rates from the RBNZ may be lower, not higher.
The Aussie also gained against all other major crosses except the Canadian dollar, the latter likely helped by continued strength in WTI crude futures.
Turning to the day ahead, the performance of Chinese financial markets, along with quarter-end flows, look set to dictate the Aussie’s direction, at least during the Asian session.
On the data front, Japan will release inflation, industrial production, unemployment, housing starts, consumer confidence and construction orders figures.
A busy data calendar by any stretch, but whether it will move markets is questionable.
Outside of Japan, Australia will also receive private sector credit figures for May at 11.30am AEST. There’ll be plenty of interest on the housing credit figures, as well as broad money growth given elevated short-term funding rates in Australia at present.
New Zealand will also release building permits and consumer confidence data.
Later in the session, data highlights include German retail sales and unemployment, the final read of Q1 GDP and consumer credit figures from the UK, Eurozone inflation, Canadian GDP along with personal spending and incomes data from the US, including the release of core PCE inflation, the US Federal Reserve’s preferred inflation measure.
It, along with the Eurozone inflation report, look the most likely to move markets.
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